EnergyChoiceMatters.com

Retail Supplier Decries "Special Treatment" In Regulatory Staff's RPS Compliance Settlement With Utility

Settlement Allows EDC To Cure Clerical REC Settlement Error For Pennies On The Dollar; Retail Suppliers Have Been "Severely Penalized" For Similar Actions

December 28, 2016

Email This Story
Copyright 2010-16 EnergyChoiceMatters.com
Reporting by Paul Ring • ring@energychoicematters.com

Warning that acceptance of a proposed settlement between Connecticut Light & Power (Eversource) and the Prosecutorial Unit (PRO) of the Public Utilities Regulatory Authority concerning RPS compliance would be discriminatory, Clearview Electric, Inc. filed an objection to the settlement, given that PURA has severely penalized retail suppliers for actions similar to the administrative RPS compliance errors resulting in the settlement in question.

"If the Authority accepts and approves the Settlement Agreement, then PURA will be reversing the precedent set by its slavish adherence to Connecticut statutes and NEPOOL GIS Guidelines that resulted in significant monetary penalties assessed against Clearview and other electric suppliers. Giving Eversource the ability to rectify its GIS violations and approving a settlement that amounts to essentially a 'pass' for their violation of GIS Guidelines while thwarting any attempt by Eversource’s competitors to do the same is discriminatory. If the Authority takes such an action, then the Authority will be violating United States Constitutional provisions relating to Due Process and Equal Protection, and the Connecticut Constitutional provisions relating thereto," Clearview alleged

"The Settlement Agreement is in clear contravention of the Authority’s past practice and precedent regarding such REC settlement failures, which the Authority reaffirmed in this very docket. Eversource’s failure to comply with the GIS Guidelines is the same as Clearview’s failure to comply with the GIS Guidelines in 2011, 2012, and 2013. The Authority did not give Clearview an opportunity to correct its mistake and instead did not count any of the RECs towards its RPS compliance, costing Clearview hundreds of thousands of dollars which affected Connecticut consumers with higher rates. Instead of following this precedent, PRO is looking to give Eversource special treatment among electric suppliers which must be rejected by the Authority," Clearview alleged

Clearview alleged that Eversource purchased 14,500 Class III RECs for 2015 RPS compliance purposes. Clearview alleged that Eversource did not, however, properly settle all 14,500 RECs into the third quarter 2015 subaccount in the NEPOOL GIS. Rather, Clearview alleged that Eversource placed the RECs into its third quarter 2015 reserved account. Clearview alleged that Eversource described the situation in a filing with PURA by stating, "the Company failed to settle the RECs in the third quarter 2015 Subaccount, which would have been indicated on the third quarter 2015 'Settled' report dated March 15, 2016. Instead, the RECs were inadvertently placed in the Company’s third quarter 2015 Reserved Account, as identified in Eversource’s third quarter 2015 'Reserved' report dated March 15, 2016."

Clearview alleged that Eversource then filed a motion with PURA in which Eversource requested that the Authority authorize Eversource to transfer the 14,500 RECs from Eversource's reserved account to the appropriate settled subaccount to satisfy its 2015 RPS obligations.

Clearview said that, in response, the Authority, consistent with its past practice and precedent, denied Eversource's motion in October 2016. "[T]he Authority has repeatedly held that RECs must be retired in the Connecticut GIS subaccount to be accepted for Connecticut RPS compliance, and that the Authority will not review or rectify any administrative or clerical errors of any person and/or entities who fail to comply with NEPOOL GIS rules or overlook the results of the GIS based upon clerical or managerial error. The Authority has consistently held that strict compliance with the GIS operating rules is necessary to maintain and safeguard the integrity of the Connecticut RPS program," PURA said in denying Eversource's motion

Eversource requested and was granted assignment of PRO Staff to the matter, and entered settlement discussions

Clearview alleged that pursuant to the settlement agreement, Eversource would be allowed to return all 14,500 banked RECs to its 2016 compliance account and would make a contribution of $26,312.50 to Operation Fuel. These two steps would, "fully discharge Eversource from any obligation to pay any additional payments or costs associated with the 2015 RPS decision," Clearview alleged

"The Settlement Agreement is, however, missing a critical piece of the puzzle," Clearview alleged. "If Eversource transfers its banked RECs back to its 2016 compliance account, then Eversource has a shortage of 2015 Class III RECs in the amount of 2,316. This figure is arrived at by taking Eversource’s claimed surplus of 12,184 Class III RECs, as reported on Exhibit A of its annual RPS filing, and subtracting that from the 14,500 unsettled Class III RECs. At $31 per Class III REC, this shortfall should result in Eversource paying an alternative compliance payment (ACP) of $71,796. The Settlement Agreement is silent on this ACP, however. In fact, the Settlement Agreement ignores the missing 14,500 Class III RECs still needed for 2015 compliance, and instead would allow Eversource to make a charitable, tax-deductible contribution of $26,312.50, in lieu of paying an ACP. Further, Eversource gets a benefit equivalent to $449,500 worth of Class III RECs reinstated for use towards 2016 compliance," Clearview alleged

"Rather than paying a $71,796 ACP as is required by PURA precedent, the LSE and the Authority’s Prosecutorial Staff have agreed to a charitable tax-deductible contribution in a much smaller amount while ignoring the compliance shortfall and, by extension, the unsettled RECs," Clearview alleged

"The proposed settlement is in clear contravention of the Authority’s past practice and precedent regarding such REC settlement failures, which the Authority reaffirmed in this very docket," Clearview alleged. "PURA reiterated this policy in denying another LSE’s motion regarding a clerical error that resulted in RECs being in the wrong NEPOOL GIS account. In a letter dated July 14, 2016, Aequitas Energy, Inc. (Aequitas), explained to the Authority that over 4,000 of its RECs were retired to the wrong state-specific subaccount. Aequitas Letter, July 14, 2016. Aequitas stated that this was due to 'clerical error' and asked the Authority to allow those RECs to be used for its Connecticut RPS compliance obligations. Id. The Authority denied the request, and in doing so stated, again, 'that RECs must be retired in the Connecticut GIS subaccount to be accepted for Connecticut RPS compliance, and that the Authority will not review or rectify any administrative or clerical errors of any person and/or entities who fail to comply with NEPOOL GIS rules or overlook the results of the GIS based upon clerical or managerial error. The Authority has consistently held that strict compliance with the GIS operating rules is necessary to maintain and safeguard the integrity of the Connecticut RPS program,'" Clearview alleged

"The Authority then went on to cite nine other dockets in which it claims to have applied this same standard," Clearview said

"Clearview faced a situation substantially similar to that faced by Eversource in this docket, but the resolution of which differs substantially and inequitably from that proposed by Eversource and the Authority’s Prosecutorial staff," Clearview alleged.

Clearview noted in its case, "after one year of back-and-forth between Clearview, PURA staff, and the Attorney General’s office, including the filing of two court cases, Clearview and the Authority settled the matter for $600,000 in ACP; this despite Clearview having purchased RECs for compliance in each of the three years at issue."

Clearview alleged that in its case, it, "made several reasonable offers of settlement. One such offer involved Clearview buying 25,000 trees and having its owner and senior staff come to Connecticut from Texas to give forty hours of community service to the state by implementing a coordinated community outreach program to plant the trees in targeted neighborhoods in Connecticut. The value of the community outreach program was never quantified, but between the trees, logistics, paid, and volunteer time to make it happen, the total program value was estimated at over $500,000. PURA summarily rejected this and every other offer of settlement made by Clearview."

"If the Authority were to approve the Eversource Settlement Agreement, then that would result in wildly disparate treatment of two similarly situated LSEs. As noted previously in this document, Eversource’s failure to properly settle its Class III RECs in NEPOOL GIS results in a shortage of 2,316 Class III RECs for 2015. In every other RPS compliance docket that Clearview is aware of, a shortage of RECs, even when caused by an administrative or clerical error, results in the imposition of an ACP upon that LSE. The Settlement Agreement would, however, allow Eversource to avoid paying the $71,796 ACP by, instead, making a charitable tax-deductible contribution of roughly 1/3 that amount. In addition, Eversource would have approximately $450,000 in banked RECs restored to its NEPOOL GIS account, still leaving a shortfall in its 2015 RPS compliance obligation. Clearview, by contrast, was not allowed to resolve its unsettled REC issue with anything other than paying an ACP, despite making a community-service-related settlement offer well in excess of that proposed by Eversource and Prosecutorial Staff," Clearview alleged

"The Settlement Agreement is, by its own terms, illogical, unsupportable, and inequitable. In all other CT RPS compliance dockets of which Clearview is aware, the failure to properly settle RECs in NEPOOL GIS has been a fatal flaw for which the Authority has accepted no excuse or explanation, no matter how reasonable or rational. For the Authority to now deviate from that past practice by approving the Settlement Agreement would be to impose a grave injustice upon all other LSEs that have been severely penalized for the same actions that Eversource undertook and now proposes to be punished with nothing more than an administrative slap on the wrist. Basic, fundamental tenets of justice and equality dictate that the Authority reject the Settlement Agreement," Clearview alleged

To the extent PURA does approve the settlement, Clearview moved that PURA re-open the Clearview settlement for the purpose of allowing Clearview to utilize the RECs that were extinguished in its settlement and obtain a refund of the paid ACP.

Docket No. 16-07-20

Email This Story

HOME

Copyright 2010-16 Energy Choice Matters. If you wish to share this story, please email or post the website link; unauthorized copying, retransmission, or republication prohibited.

Archive

Daily Email

Events

About/Contact

Search